The Tragic History of RC Cola

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Who drinks RC Cola, anyway?

It’s a question Coke and Pepsi drinkers have been asking for decades. In the prolonged marketing battle that began in the '70s and saw the beloved major brands duke it out via celebrity endorsements, rewards promotions (Pepsi Stuff, anyone?), an onslaught of advertisements, and even a race into space, RC Cola remained on the sidelines, a quiet blue and red can that seemed content to simply be.

Fact is, RC has had loyal fans throughout its more than 100-year history. Its roots go deep in the south, where drinking one with a Moon Pie is a blue-collar tradition that’s still popular today. There’s even a song that celebrates the pairing. RC also has a presence internationally, in countries such as Estonia, Thailand, and Iceland. It’s currently one of the top-selling soda brands in the Philippines.

But the number of RC drinkers could have been much, much higher. In an alternate—and completely plausible—universe, it would have given Coke and Pepsi a run for their money. At one point, it did. Believe it or not, Royal Crown Cola used to be one of the most innovative companies in the beverage industry. It came out with the first canned soda, the first caffeine-free soda, and the first 16-ounce soda. It was the first to take diet cola mainstream, and the first to stage nationwide taste tests.

Given its long and pioneering history, RC deserved to be more than the middling soda brand it is today. In an industry that lives and dies by marketing, RC didn’t do nearly enough. But its failure wasn’t just due to lack of initiative. It was also a case of supremely bad luck, bad judgment, and a fateful ingredient known as cyclamate.

Like its main rival, Coca-Cola, RC Cola also started in Georgia, in the town of Columbus. It was a disagreement with Coca-Cola, in fact, that led a man named Claud Hatcher to develop what would become the Royal Crown Cola Company. Hatcher was a pharmacist and a grocery wholesaler who, along with his father, ran the Hatcher Grocery Company. In the early 1900s, the Hatchers sold a lot of Coca-Cola to their customers—so much, that Claud felt he was entitled to a discount or some sort of commission acknowledging his contribution to the company. The local Coke representative, however, denied the request, knowing full well Coke was the most popular soda in the country and not one to be pushed around by its customers. Frustrated, Hatcher told the representative he’d purchased his last case of Coca-Cola, and vowed to develop his own brand.

After months spent tinkering in the basement of Hatcher Grocery, Claud came up with Royal Crown Ginger Ale, an effervescent alternative to Coke’s caramel-colored (and formerly cocaine-laced) bestseller. The drink, with its regal-sounding name, proved quite popular, and soon Hatcher and his father ditched the grocery gig to become full-time soda bottlers. Claud’s next development was Chero-Cola, a cherry-flavored cola that would grow the company into a legitimate soda maker and, inevitably, put him in direct competition with the brand he used to sell.

In the early 1900s, like today, Coca-Cola was far and away the most profitable soda company in the United States. And with that success came numerous imitators eager to cash in on the market it had created. According to Tristan Donovan, author of Fizz: How Soda Shook Up the World, these included knockoffs like Candy-Cola, Kos-Kola, and Coke-Ola. There was even a cola called Klu Ko Kolo, made to attract those suddenly interested in the Ku Klux Klan after the group was featured in D.W. Griffith’s 1915 movie The Birth of a Nation. Coke was hardly amused. To maintain its dominance in the industry, the company began suing these imitators for trademark infringement. Over the next three decades, Coca-Cola sued more than 500 copycat manufacturers, according to Donovan, and won more often than not.

Caught in the crosshairs were Claud Hatcher and Chero-Cola, which Coke argued could not use the term “cola” in its name. Hatcher fought the lawsuit, and continued to fight it for several years while simultaneously building Chero-Cola’s distribution to more than 700 franchise bottlers. His soda was no mere imitator, Hatcher would claim time and again, and he would not be bullied out of business.

In 1923, a judge ruled in Coca-Cola’s favor, saying that Chero-Cola was in violation of Coke’s trademark. That meant Hatcher had to drop “cola” from his company’s name, thereby costing him valuable brand recognition. A drink called “Chero” just didn’t sound the same, and sure enough, Chero sales slipped. After a few years Hatcher changed the company’s name to that of his most popular fruit drink, Nehi (pronounced “knee-high”).

The Great Depression put a dent in Nehi’s sales, just as it did for other soda companies. To make matters worse, Claud Hatcher died in 1933, leaving Nehi in the hands of its sales director, H.R. Mott. What looked to be a disaster, though, turned out to be just the opportunity the company needed. Mott was a shrewd businessman. Immediately after taking over, he jettisoned poor-performing drinks and focused the company’s efforts on top sellers. He also re-introduced Chero-Cola without the cherry flavoring, and under a new name—one that, after two turbulent decades, harkened back to the company’s beginnings. In 1934, Nehi came out with Royal Crown, and over the next several years its sales increased tenfold.

A 1943 ad featuring Rita Hayworth. Jose Roitberg via Flickr // CC BY-NC-ND 2.0

The middle of the 20th century brought one win after another for Nehi. In 1944, the courts ruled that Coke did not, in fact, own the word “cola,” thus allowing Royal Crown to become Royal Crown Cola, or RC Cola. With nationwide distribution and sales on the up and up, Nehi shoveled money into print and television ads featuring stars like Bing Crosby, Joan Crawford, Shirley Temple, and Lucille Ball. “You Bet RC Tastes Best!” magazine ads crowed. And this wasn’t just an empty boast: Nehi had staged public taste tests across the country pitting RC against competitors Coke and Pepsi, and declared itself the winner. It was the first time a beverage company had ever done such a promotion. Whether or not the tests were rigged in some way is up for debate; what mattered was that people believed them.

Slowly, steadily, RC muscled its way into soda fountains and onto grocery store shelves. To stay top-of-mind with consumers, it continued to innovate. In 1954, it became the first company to nationally distribute soda in aluminum cans. Shortly after, it began selling soda in 16-ounce bottles as an alternative size for thirsty fans. In 1959, Nehi changed its name to match its bestselling product, becoming the Royal Crown Cola Company.

But while Royal Crown had made significant progress, it would continue to trail Coke and Pepsi so long as it continued to sell a similar product. What it needed was something new. What it needed was a game changer.

In 1952, the founder of a sanitarium in Williamsburg, Brooklyn named Hyman Kirsch invented a sugar-free soda called No-Cal. Available in ginger ale and black cherry, No-Cal was made specifically for patients in Kirsch's sanitarium who were either diabetic or suffering from heart ailments. Kirsch quickly discovered that his drink had a much wider appeal, and along with his son began making other flavors, like chocolate, root beer, and cherry. The two sold No-Cal to local stores and quickly built up a distribution network that extended throughout New York and the northeast. Since Kirsch wasn’t a businessman, however, he struggled to expand beyond the regional market. He also continued marketing No-Cal mainly toward diabetic customers, further limiting his reach.

Kirsch’s success caught the eye of the Royal Crown Cola Company. In the mid '50s, it began secretly developing its own diet soft drink—one that would appeal not just to diabetics, but to an entire nation of increasingly calorie-conscious consumers. While other food and beverage companies continued to push everything sweet, salty, and delicious, RC recognized a budding demand for healthier choices.

After a few years RC came out with Diet Rite, a drink that the company believed would be the breakthrough it so desperately needed. Test markets had emphatically confirmed its appeal. One, in South Carolina, saw supermarket managers clamoring for the product. “In Greenville, S.C., where we had been running a poor third behind Coke and Pepsi, we actually had grocery store managers getting into their cars and chasing down RC trucks to get Diet Rite on their shelves,” one RC rep noted.

What could cause such a reaction? It wasn’t just that Diet Rite was nearly calorie-free—it’s that it was nearly calorie-free and tasted strikingly similar to the real thing. The key ingredient—the one Kirsch had first used in No-Cal—was an alternative sweetener called cyclamate that was 30 times sweeter than sugar. First developed by a student at the University of Illinois in 1937, it was initially sold as a tabletop sweetener. In 1958, the Food and Drug Administration gave full approval, paving the way for its use as a mass-market ingredient. The timing couldn’t have been better for Royal Crown.

In a particularly shrewd bit of marketing, the company made sure to sell Diet Rite just like real cola: In the same slender bottles for a nickel each, or as a six pack. It also made sure to put the word “cola” on its labels. Consumers wanted something different, RC executives figured, but not too different.

When Diet Rite hit shelves in 1962, it was a smashing success. Within a year and a half of its release, it had rocketed up to number four on the sales chart, behind Coke, Pepsi, and regular RC Cola. America, it turned out, was ready for what had for years seemed oxymoronic: a healthy soda. The rest of the industry was in something close to a state of shock. “So stunning was Diet-Rite Cola’s impact on the soft drink market in the early 1960s,” reported Georgia Trend, “that its acceptance could be compared to the beginnings of mighty Coca-Cola itself some 75 years earlier.”

A 1967 ad featuring ballet dancer Tanya Morgan. Mid-Century Pretty via Flickr // CC BY NC-2.0

Coke and Pepsi were caught completely off guard. Not only had they not anticipated the mainstream appeal of diet soda, they didn’t even have anything in the pipeline. Within a year, Coke would scramble to release TaB, which it also sweetened with cyclamate. Pepsi responded with Patio Cola, a diet soda aimed at women that also contained cyclamate, and which it would soon rebrand as Diet Pepsi. There were, predictably, numerous other fast followers to the market, including long-forgotten brands like LoLo, Coolo-Coolo, and Bubble-Up. In 1965, Coke came out with a citrus-flavored diet soda called Fresca.

None of them, however, could catch Diet Rite, which continued to build market share for Royal Crown Cola.

“RC had the dominant diet cola brand, and that was a very big deal,” Tristan Donovan tells mental_floss. “For RC, there was this sense of, ‘finally, we’ve broken through.’”

By the late '60s, Royal Crown owned 10 percent of the soda market. That was far from dominating, but it was still a very respectable figure, and the company was poised for further growth. By all accounts, the company that started in the basement of a small town grocery store was positioned to become a major player in the soda industry.

The rise of diet soda may have delighted soft drink manufacturers and American consumers, but it downright frightened the sugar industry. After decades of pumping its signature product into sodas, here was a comparable beverage that did away with sugar entirely. What if diet sodas continued to grow? What if all sodas became diet sodas? Ever resourceful, the industry searched for legal channels to undermine diet drinks.

In the mid-'60s, it began: the slow trickle of studies suggesting that cyclamate was hazardous. In 1964, a study linked cyclamate to cancer in animals, and raised the possibility that it could have adverse effects on humans. But the authors stopped short of linking the sweetener to specific conditions like cancer or birth defects. Royal Crown president W.H. Glenn dismissed the study as “nothing derogatory,” and other manufacturers echoed that sentiment. As the decade wore on, however, studies made more specific claims. In 1969, the decisive blow against cyclamate came in the form of two studies. One claimed that chicken eggs injected with cyclamate resulted in deformed chicks, while another found that rats given doses of cyclamate showed an increased risk of developing bladder tumors. The studies’ findings, splashed across newspapers and television screens nationwide, implicated cyclamate as a very dangerous ingredient.

“Everyone began saying, ‘Oh my god, diet soda’s going to give you cancer!’” Donovan says. “The market collapsed almost instantly.”

The FDA, meanwhile, had no choice but to remove its "generally recognized as safe" (GRAS) classification for cyclamate. The diet soda industry went into a tailspin, plummeting from 20 percent of the market to less than 3 percent. Manufacturers frantically reformulated their drinks and tried to reassure consumers, all to no avail. Overnight, the diet soda craze had come to a standstill.

The downturn hit Royal Crown particularly hard. Diet Rite had been its star performer, the one advantage it had over Coke and Pepsi. Without it, all the company had was the nation’s third favorite cola, which on its own wasn’t going to gain any ground on its rivals. After a few weeks, the company re-released Diet Rite, this time sweetened with saccharine. But the taste—saccharine has a notoriously metallic tinge to it—wasn’t the same, and many people weren’t ready to come back to diet drinks anyway. Eventually, Coke and Pepsi re-entered the market with better formulas and marketing, and once again, Royal Crown Cola had merely served as the guinea pig for its competitors.

According to Donovan, the cyclamate backlash was the direct result of the sugar industry’s meddling. That lobby, he said, provided $600,000 in funding for the studies that doomed cyclamate, both of which are now seen as controversial because they involved exposing animals to much higher levels of the ingredient than any Diet Rite or TaB drinker could ever possibly imbibe. To get the same amount of cyclamate as the rats in one of the studies, for instance, you’d have to drink more than 500 diet drinks a day. Today, cyclamate is widely used as a sweetener in countries like Australia, South Africa, and throughout the European Union. Scientists around the world say it's safe for consumption, yet the results of the 1969 studies still linger. The United States, Japan, and 45 other countries have upheld their ban on the additive.

How could such dubious results be admissible? Donovan pointed to a legal loophole called the Delaney Clause, an amendment to the Food, Drug and Cosmetic Act of 1938 established by a senator named James Delaney, who investigated insecticides and carcinogens in the food industry in the late '50s. The clause required the FDA to ban any additive found to “induce cancer in man, or, after tests, found to induce cancer in animals.” As well-meaning as the Delaney Clause was, it didn’t outline restrictions on the amount of a certain ingredient that could be tested. No matter if it was a granule or a gallon, if it proved hazardous to human or animal health, the ingredient had to be pulled.

“The Delaney Clause was a very well-intentioned but poorly thought-out law,” Donovan says.

As unfortunate as Royal Crown’s luck was, its response in the years that followed didn’t help matters. Vowing to never again put so many resources behind a single product, the company began to diversify. It bought two fruit juice manufacturers, Texsun and Adams Packing. Then it took the truly bizarre step of purchasing seven home furnishing companies. What, exactly, the soda maker saw in that industry is unclear, but it must have been pretty compelling: By the mid-'70s, nearly a quarter of Royal Crown Cola’s business was tied up in making mirrors, picture frames, floor tiles, and cabinets.

The downhill slide accelerated. In 1976, Royal Crown bought the fast-food chain Arby’s. That acquisition, at least, made some sense, as it would give the company an outlet for its fountain sodas. But Royal Crown mismanaged the chain, introducing burgers and other conventional fast-food fare to a company that had made its name with roast beef sandwiches. In 1984, Victor Posner, a billionaire businessman who specialized in corporate takeovers, acquired Royal Crown, which by this time had dropped the “cola” in its name to become Royal Crown Companies. In the nine years Posner owned Royal Crown, he slashed the company’s marketing budget and battled executives over the company’s direction. In 1987, the government convicted him on tax evasion charges, and soon after investigated him for insider trading.

While Royal Crown was busy cutting costs and making lampshades, Coca-Cola and Pepsi were dumping millions into an unprecedented marketing arms race. Beginning in the mid-'70s, the two began one-upping each other with taste tests, rewards programs, TV ads, new products, and numerous other promotions. Pepsi unveiled Pepsi Stuff; Coke countered with Coke Rewards. Coke put Bill Cosby in its ads; Pepsi answered with the King of Pop. In 1985, after it found out that Coke was putting a specially engineered Coke can aboard the Challenger space shuttle, Pepsi quickly rigged up its own can and pressured NASA into letting it onboard. Neither can worked the way it was supposed to, and the astronauts complained about the gimmick. But no matter: The two companies had been to outer space.

From the consumer perspective, the cola wars looked to be two giants bent on destroying each other. The reality, though, was that both of them benefited from the exposure.

“The cola wars took sales away from any brands that weren’t Coca-Cola and Pepsi,” Donovan says. “At this point, nobody is even thinking about RC because they’re not in this race.”

With its limited ad budget, RC came out with some standard-issue TV spots showing people chugging from a bottle before pausing to smile at the camera. There were even some mildly amusing ads, including one in which prisoners “sentenced to a life of Coke or Pepsi” snuck cans and bottles of RC into their cells.

To most people, though, the more than 100-year-old brand was largely invisible.

An Onion headline from 1997 seemed to sum things up: "RC Cola Celebrates 10th Purchase." Through the '80s and into the '90s, Royal Crown continued to lose market share while its two main competitors gobbled it up. The company had a loyal following and national distribution, but in the eyes of a Coke-and-Pepsi nation, it was the loser, the perennial bronze medalist.

Things only got worse for RC. As the two cola giants continued to grow, they inked deals with retailers that guaranteed them ample shelf space. They offered special discounts to supermarkets and began paying slotting fees, a practice that still exists today. (If you’ve ever wondered why Coke and Pepsi dominate the soda aisle, it’s because they’re oftentimes paying for that real estate.)

"[Coke and Pepsi] started carving up the retail market and shutting RC out in the process," Donovan explains. "So not only was RC losing out on advertising, it was losing out on stores as well."

RC tried to wedge its way back into the fight. After the company got out from under Posner’s ownership, it gained a solid advertising and development budget. Its first attempt to jump-start sales came in 1995 with RC Draft, a so-called “premium” soda made with cane sugar. Unfortunately for RC, people didn’t see what was so “premium” about the drink, and within a year it was pulled from shelves. In 2000, Cadbury-Schweppes bought RC, then moved it over to its Dr. Pepper Snapple Group. In the years that followed, RC came out with a few souped-up colas—RC Edge and RC Kick—along with low-calorie options RC Ten and a re-branded Diet RC. None of the new products managed to move the dial, and today no RC product is anywhere near the best-seller charts.

So who drinks RC Cola these days? In addition to its southern fans, the brand has a presence in Chicago, where it’s served at Bears games and at pizzerias throughout the city, which often give out a free liter with orders. According to Encyclopizzeria, that arrangement began back in the '60s, when a creative local bottler got in good with local pie shops, figuring the pairing of RC and deep dish pizza would generate good vibes with customers. It did, and today many a Chicagoan has a soft spot for the underdog cola.

Aside from the Windy City, though, RC’s appeal seems tied to small town America and times gone by. “The company never shook its strictly southern, small-town image,” states the New Georgia Encyclopedia, which chronicles the state’s history. For fans of RC, that image as the overlooked, underappreciated casualty of the cola wars is just what they love about it. It’s the scrappy bargain brand—the un-hyped, unadorned alternative for true cola lovers.

Donovan, for one, believes RC’s narrative would have been much different had the cyclamate ban not happened. Diet Rite’s continued success could have given Royal Crown the confidence—not to mention the funds—needed to market more aggressively and continue innovating. Its name recognition could have grown, and its clout with restaurants and retailers along with it. Could it have joined Coke and Pepsi in the stratosphere of soda sales, or even have overtaken them?

"RC probably wouldn’t have had the resources of Coke or Pepsi," Donovan surmises, "but they could have held their own a lot better."

These days, being a top soda company isn’t something worth bragging about. The entire soft drink industry is declining, and has been for more than a decade as consumers opt for healthier choices. Over the past 20 years, sales of full-calorie soft drinks have fallen by more than 25 percent. Instead of one-upping each other, Coke and Pepsi are scrambling to stay relevant with a nation that’s rejecting their signature beverages. They’re expanding into juices and snacks, developing new zero-calorie soft drinks and dumping millions of dollars into advertising tying their brands to happiness, nostalgia, and other emotions that might transcend any worries about personal health.

Drinking less soda is surely a good thing. But for many people, there will always be something wonderful about a full-calorie, ice-cold cola. Whether it’s an everyday thing or an every-so-often treat, odds are most people will reach for a Coke or Pepsi. But if history had gone just a bit differently, they could be just as easily reaching for an RC Cola.

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April 14, 2016 - 1:00pm
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